American fashion brands are warning that it will be difficult for them to survive without government aid. Demand for new products has disappeared over the past months owing to the coronavirus outbreak, which has resulted in shops closing down for an indefinite period. At the same time, as the number of coronavirus patients swells in the United States, health authorities and hospitals are experiencing an acute shortage of masks and other protective gear.
Given this situation and with more than 50,000 fashion stores shuttered across states, many brands are not only supplementing for the shortage of protective gear but also looking for a survival strategy. These include a number of fashion brands that are fighting the pandemic with the U.S. government by producing surgical masks, N-95 respirators and other medical gear.
Fashion Brands Shift to Mask Production
Fashion brands and retailers are shifting production lines from making apparel to manufacturing masks and gowns, while many are routing their own supply of masks to healthcare workers. The Gap, Inc. (GPS - Free Report) , reportedly, is working with its manufacturing partners to explore production of fabric masks and other protective gear for care givers.
The apparel giant is working out solutions to use any excess garment production capacity for additional fabric masks and protective gear. HanesBrands, Inc. (HBI - Free Report) is one of the apparel makers having a contract with the U.S. government to produce cotton masks. The company already has started production and plans to churn out 1.5 million masks every week, using its designs and patterns.
Canada Goose Holdings Inc (GOOS - Free Report) has ramped up production of gowns and scrubs at two of its facilities in Canada with minimum workers. The company aims to donate the scrubs and gowns to healthcare workers in the United States. Ralph Lauren Corporation (RL - Free Report) is on job to produce 250,000 masks and 25,000 isolation gowns that have already met FDA standards. Gap and HanesBrands each carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fashion Industry in Crisis
The $2.5 trillion global fashion industry has taken a major hit following the coronavirus outbreak. Global fashion sales are predicted to plunge around 30% in 2020, according to a report by the Business of Fashion (BoF) and consultants McKinsey. American retail giants like Macy’s, Inc. (M - Free Report) and Nordstrom, Inc. (JWN - Free Report) have shuttered all their stores and are bleeding.
Meanwhile, upon witnessing the largest daily increase of COVID-19 deaths of 68, on Apr 8, California’s governor Gavin Newsom said that the state is ready to spend nearly $1 billion to buy up to 200 million masks every month to boost its stockpile.
As of early March, the United States had only 12 million N-95 respirators and 30 million surgical masks, just 1% of what is estimated to be needed during this pandemic. While companies like 3M Company (MMM - Free Report) and Honeywell International, Inc. (HON - Free Report) , which are traditional mask makers, are struggling to keep pace with growing demand, it definitely is a good move by apparel makers to shift to mask manufacturing as their core businesses have come to a standstill.
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